Napster users mixed over settlement offer

SAN FRANCISCO, California (CNN) -- The verdict from Napster users was mixed after the company's proposed $1 billion settlement with the record industry over a copyright infringement lawsuit.

Some expressed outrage. Others recommended a boycott of the music industry. Still others said they had no problem with paying for the popular music file-sharing service.

"There are a lot of realistic people in the Napster community who look at the issues facing them and agree they are willing to pay some subscription fee for the opportunity to download music. ... The reality is that music is a business," wrote Cary Ussery on a Napster message board.

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CNN's James Hattori reports on Napster's $1 billion offer to record labels

Another user, using the screen name "hnladue," disagreed: "Why should I have to pay to use Napster? It's not like you get really great CD-quality sound. Most downloads are really slow, and usually can't get the whole songs anyhow!"

The disparate reaction seemed to underscore just how complicated the issues are for Napster and the music industry, as well as on the road ahead in the copyright fight.

$1 billion paid under proposal

Under the proposal, Napster would provide guaranteed revenue of $1 billion to the major labels, songwriters and independent labels and artists over the next five years. Major labels would receive $150 million per year for a non-exclusive license, divided according to files transferred. Another $50 million per year will be set aside for independent labels and artists to be paid out based on the volume of files transferred.

The model includes a basic membership plan for users that would cost an estimated $2.95 to $4.95 per month with a limit on file transfers. A premium membership would cost $5.95 to $9.95 and would offer unlimited file transfers.

"I won't pay. I'll go back to buying CDs before I pay for a bunch of 128k MP3 files. Bleh!" wrote one anonymous Napster user.

Another added simply, "I will pay."

One user, "tonite fubar," urged Napster patrons to stage a music boycott. "Every registered user of Napster should stop buying music. Whether it's for a week, a day, or a month, just stop buying."

Napster is one of the most widely used Web sites, with 57 million registered users.

Recent ruling a setback

In a major defeat last week, a federal appeals court ruled the company knew its users were violating copyright laws through its music file-sharing service. The court ordered a lower court to redraft an earlier injunction that would essentially shut down the Web site.

"We hope that the users of this system, the members of the community," said Napster CEO Hank Barry," will understand that the reason that the system will be shut down is, even though (users) are willing to pay, the record industry is not ready to take their money. And we think that's wrong and we want to come to a settlement to make that happen."

The new proposed Napster, slated to launch this summer, also would have limitations of 128 kilobytes per second and lower for sharing files, which would hamper both the speed and quality of music being swapped. Users also would have to pay an additional fee to burn CDs and to transfer their music to portable devices.

"I am very disappointed with the latest news about the settlement," one Napster user said. "I firmly believed that Napster would fight the money grubbing record industry to the very end."

Whether the music industry accepts the offer remains to be seen.

Declan McCullagh, a reporter for Wired Magazine, told CNN, "This is going to come down to dollars and cents. Is this enough money from Napster to make it worthwhile for the record companies? The preliminary results suggest probably not. The record companies aren't really nibbling, at least not yet."